MEPS Global Steel Price has Fallen 24% in the last 12 Months

MEPS Global Steel Price 1 After a slight upward adjustment in May 2015, global steel prices continued on their, now familiar, downward path in June 2015.

The reduction in the MEPS Global Steel Price is the result of fallout from the collapse in the cost of iron ore as the mining companies made huge investments in new capacity. For this reason, the substantial steel selling price reductions have not been a major disaster for the world’s steel manufacturers. A significant amount of the erosion in mill revenue has been offset by a substantial decrease in the cost of steelmaking raw materials.

In the steel sector, decreasing selling prices are no guarantee of a substantial upturn in demand – particularly in an oversupplied market. When global steel prices start to slide, the buyers will often postpone ordering material in the hope that lower prices will develop in the future. Inventory building is reduced, which in turn creates no discernible improvement in market size in the short term.

In the United States, GDP growth has once again been revised upwards. It now stands at minus 0.2 percent, for the first quarter of 2015. The Purchasing Manager’s Index (PMI for manufacturing) increased last month to 52.8 – a positive sign. The majority of buyers continue to purchase only for their immediate requirements. The prospects of a substantial steel price revival are poor. The threat of cheap overseas imports is ever present.
MEPS Global Steel Price

The Canadian steel market is still moving at a slow pace. Delivery lead times from the mills are shortening. The economy is weak. Substantial quantities of imports have already arrived at the ports. Steel inventories at the OEM’s are in decline. Service centre stocks are starting to return to normal levels.

Chinese finished steel output increased in May by approximately 2 percentage points, month-on-month. The domestic market is unable to utilise such an increase in tonnage. Exports have expanded by over 30 percent, year-on-year, in the first five months of 2015 but they are insufficient to take up the excess domestic supply. Some steel mills are reportedly making a loss of 300 yuan on each tonne of steel produced.

In Japan, the local currency has weakened recently. This should enable exporters of manufactured goods to be more competitive in global markets. Raw material input costs are, however, rising. Signs of a slight improvement in economic activity are on the horizon.

MEPS Global Steel PriceThe South Korean Trade Commission recently responded to complaints about foreign imports of structural sections into the country by imposing anti-dumping duties on material from a range of suppliers. Seven mills were exempt when they agreed to lift selling values. Steel imports are on a decreasing path. In April, a year-on-year, reduction was reported, whilst, in May, the decrease was 11 percent.

The Taiwanese steel market has been influenced by price movements in China. Reinforcing bar list prices have been reduced. We detected very few positive vibes from the market this month.

The Czech and Slovak economic growth figures remain encouraging, with GNP figures in the first quarter at 2.9 and 3.9 percent, respectively. The Ukrainian crisis is weighing heavily on the fortunes of both countries. In Poland, the flat products sector has been quite steady this month.

Steel demand in Western Europe is holding up reasonably well. The mills are experiencing strong competition from imports. The European Commission has instigated an anti-dumping investigation against imports of cold rolled coil from China and Russia. Selling figures are under negative pressure in most member states.


This article originally appeared at MEPS and is reproduced with permission.

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